- The AUD / USD fell the highest since mid-January with 0.6899 being the recent high.
- A general sense of risk and the weakness of the US dollar favor the run-up of the Australian pair.
- Riots in the United States continue despite warning from US President Trump.
- A long line of Australian data to come, but Q1 GDP stands out.
After probing the highest since January 17 in the past hour, the level of 0.6899, the AUD / USD drops to 0.6890 early Wednesday morning in Asia. The Australian pair seems to encourage the general weakness of the US dollar and optimism surrounding the economic reopening, supported by the absence of any major negative from the RBA, to probe the several-week high. However, the last pause in the upside could be the concern of traders before the key data.
DXY posted a six-day losing streak to refresh the 11-week low…
The US dollar index (DXY), an indicator of the greenback’s strength against major currencies, extended the previous five-day decline to its lowest since March 16, the 97.43 mark, before climbing slightly to 97.66 at the end of Tuesday’s US session. .
Despite a light schedule the day before, the US currency failed to stop its decline as protests against the alleged murder of Minnesota police George Floyd continued. The civil unrest became severe at first and lost its strength after the military used forces under the leadership of US President Donald Trump. Despite this, public outrage still reigns in the world’s largest economy, prompting President Donald Trump to use more resources as he had promised earlier.
The markets remain optimistic…
World markets have mostly ignored tensions from the United States amid an economic recovery in Europe. Germany has sent signals to reopen tourism the day before while other European countries are also on the way to pre-pandemic activity. It should be noted that most of the region’s economies depend on tourism as the main source of income.
In addition to optimistic expectations of the economic recovery, hopes for further stimulus from the European Central Bank (ECB), as well as from some of the leading central banks, also favored the bulls.
It should be mentioned that the RBA did not express major concerns for the Pacific nation in the rate return released on Tuesday.
Against this backdrop, yields on 10-year US Treasuries gained 2.5 basis points (bps) at 0.687%, while the benchmarks on Wall Street also closed with slight gains at the end of the session. Tuesday in the United States.
By the way, a slew of Australian data could occupy traders of the AUD / USD pair during the Asian session on Wednesday. However, GDP figures for the first quarter (Q1), expected at -0.3% against + 0.5% previously, will be key. In addition, comments from RBA (Financial System) Assistant Governor Michele Bullock and housing market data will also be crucial to monitor short-term direction.
Short-term trading conditions signaling an overbought mood, a withdrawal to the low of early January near 0.6850 cannot be excluded. However, any further decline may recall February highs close to 0.6775. Meanwhile, a steady rise above 0.6900 allows the pair to target the January 16 peak near 0.6935 before targeting 0.7000 round number.